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US military bombing Iran but "safe haven failure", the US dollar surges and falls hidden risk of collapse
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: The US military bombed Iran but saw "risk aversion failure", and the US dollar surged and fell and hidden the risk of collapse." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
Last Friday, due to the uncertainty of the war in the Middle East and its possible impact on the global economy, the US dollar index hit the largest weekly increase in more than a month, and the daily line remained flat. As of now, the US dollar price is 99.02.
Geo-conflict: ① Iranian parliament supports closing the Strait of Hormuz, but the final decision is in the hands of the Supreme National Security Council of Iran. ② Houthi armed forces: will start attacking American ships again. ③Trump: It is politically incorrect to use the term "regime change", but if the current Iranian regime cannot "make Iran great again", then why not carry out a regime change? ④ US media: The United States has contacted Iran and denies seeking regime change. ⑤ The United States announced details of its operations to crack down on Iran's nuclear facilities: using B-2 bombers and 14 giant ground-boring bombs. ⑥Trump: Any retaliation against the United States will lead to a greater blow. ⑦ Iranian officials: Iran currently has the right to legally withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons. ⑨ Iran’s Supreme Leader Advisor: Enriched uranium materials are still “not over”.
Trump: The US military airstrikes three major Iranian nuclear facilities, including Fordo. Iran must immediately agree to end the war; Iran's Foreign Minister: Nuclear facilities can be rebuilt even if they are destroyed, and technical knowledge cannot be "destroyed".
U.S. Secretary of State: The United States prepares for dialogue with Iran on the 23rd.
People inside the matter: Saudi Arabia is on high alert after the United States launched an air strike on Iran.
YiForeign Minister Lang arrived in Moscow and will meet with Putin.
The Security Council will hold an emergency meeting on the US attack on Iran's nuclear facilities.
"The US side is not satisfied with the negotiation location", Russia and the United States suspend negotiations on sensitive issues in the diplomatic field.
Belarus and the United States negotiate to resume normal diplomatic relations.
According to Iranian media reports, the Iranian stock exchange will be closed until the end of this week.
Market News: The EU abandons its proposal to lower the price cap on Russian oil to $45.
Macroeconomic:
Trump: If the Fed cuts interest rates to 1%-2%, the United States will save a trillion dollars a year, it may change its mind and fire Powell.
Federal Monetary Policy Report: Inflation is "slightly high" and the job market is "in good condition". The policy is ready to wait for a clearer economic outlook.
Federal Governor Waller: Perhaps the rate cut could be cut as early as July meeting. Fed Barkin: Current data shows that there is no urgent reason to cut interest rates. Fed Daly: Economic fundamentals are moving in a direction that may require interest rate cuts.
The United States' demand for the EU to make unbalanced trade concessions may trigger the EU's countermeasures.
Summary of institutional views
UNB: The pound has room for a pullback or tests the main support area
Quek SerLeang, senior technical analyst at UOB Global Economic and Market Research Department, said that the pound has room for a pullback against the US dollar, or tests the main support level of 1.3295-1.3335. The analyst pointed out that on the daily chart, the uptrend line since early January is at 1.3295, and the 55-day index moving average is at 1.3335. The analyst added that breaking below the support area could expose the bottom of the day-to-eye equilibrium cloud, which is expected to be at 1.3155 in the xmmarkets.cning days.
xmmarkets.cnprehensive Market Review: The risk of further rising safe-haven currencies is obviously greater
Carol Kong, currency strategist at the Federal Bank of Australia, said that the market is currently in a wait-and-see state, waiting for Iran's response. xmmarkets.cnpared with the negative impact of conflict on the economy, the market is more worried about its role in boosting inflation. The trend of the foreign exchange market will be xmmarkets.cnpletely subject to the remarks and actions of the Iran, Israel and the US governments. If conflicts between the parties escalate, the risk of further rising safe-haven currencies is obviously greater.
Charu Chanana, chief investment strategist at Saxo Bank, said the market now appears to see the U.S. strike against Iran as a controlled event rather than the beginning of a broader war. The downturn inflows of safe-haven funds suggests that investors still see it as a one-time escalation rather than a disruption to global oil supply or trade.
UBS: The Bank of England follows the script and maintains the pound-to-US year-end target of 1.3X unchanged
As the market position clearly turns to be optimistic about the pound rather than the US dollar, the possibility of a pullback against the US dollar has increased. However, we still firmly believe that pound and the United States will move higher further. ITheir year-end target price is 1.38, and it is expected that the pound and the United States will break through the 1.40 mark in the first half of 2026.
In addition, the Bank of England once again kept interest rates unchanged this Thursday. This underscores policymakers’ xmmarkets.cnmitment to lowering high inflation to target levels and is in line with our expectations for a quarterly rate cut for the Bank of England. Although the vote was slightly dove, the overall meeting was quite balanced and the pound was not affected. We still believe that the pound will rise slightly against the dollar over the period we predict, with the US dollar reaching 1.40 by the end of June 2026, amid the convergence of relative growth and widening yield gaps. In the recent rebound, 1.32 switched from resistance to support, and the new resistance could be slightly above 1.36.
The risks of the above view are that the UK labour market easing lasts longer and inflation falls faster. Furthermore, if the Fed's position turns to hawkish, or the overall view of capital flows changes, although we think this is unlikely to happen in the near term, the dollar may strengthen again by then.
Facefield Bank: The British vice president joins the "dove" camp and is expected to cut interest rates X more this year
The Bank of England Monetary Policy xmmarkets.cnmittee (MPC) maintained the bank interest rate at 4.25% as scheduled at its June meeting. The only "surprise" of the meeting was that the Bank of England Deputy Governor Ramsden voted to support a 25 basis point cut. Given his recent voting history. Ramsden "reached a consensus" with Taylor and Dingra, who voted for a 50 basis point cut in May, and all three xmmarkets.cnmittee members supported a 25 basis point cut at the meeting. Their reasons for vote include: significant loose labor markets, lower-than-expected wage growth, and weak consumer spending and potential growth.
The pace of easing in the future will mainly depend on the degree of relief of key indicators of inflation sustainability (including the labor market, wages and inflation itself, especially wage growth). Given our more pessimistic view of economic growth and labor market outlook than the Bank of England, we believe MPC will stick to the pace of quarterly rate cuts, but later this year, and perhaps even as early as September meetings, there is a risk of a more aggressive rate cut.
We are more pessimistic about economic growth and the labor market than the Bank of England, which should lead to wage growth and inflation returning to normal faster. Therefore, we expect MPC to cut interest rates twice this year (August and November) and three times in 2026, bringing bank interest rates to 3%. Furthermore, we still believe there is a risk of more radical easing this year, which may be seen as early as September meetings, which may be driven by a more dramatic downward trend in the labor market.
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